GFL has made several hundred deals in Canada and the United States since its founding in 2007.Deborah Baic/The Globe and Mail
GFL Environmental Inc. GFL-T, the waste management and recycling company, appears to have everything going for it: a large geographical footprint in North America, lots of recurring revenues, an economically defensive business model and a long runway for acquisitions.
So why is the stock a dud?
The share price has slumped 20 per cent over the past 12 months, as of Thursday, underperforming the S&P/TSX Composite Index by more than 60 percentage points – and the company’s big acquisition announcement this week didn’t help matters.
To be fair, much of the North American waste management sector – which includes Texas-based Waste Management Inc., Arizona-based Republic Services Inc. and Toronto-based Waste Connections Inc. – has been struggling over the past year after a two-year rally fizzled.
From mid-2023 to mid-2025, the four stocks gained nearly 70 per cent, on average, beating major indexes.
Investors embraced companies that promised stronger revenue growth through consolidation, rising efficiencies, impressive pricing power and new opportunities for generating gas from landfill sites.
That added an exciting layer on top of the more typical reasons for owning waste haulers, such as their reputation for navigating high inflation, rising interest rates and economic uncertainty with thick profit margins and big barriers to new competition.
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But the two-year rally pushed valuations to lofty levels. Price-to-earnings ratios based on estimated profits rose above 40, making garbage haulers more expensive than the tech-fuelled S&P 500.
That became an obstacle when promising growth subsided.
Waste Management – the industry heavyweight with a market value of more than US$90-billion based on its outstanding shares – generated revenue growth of 14.2 per cent in 2024. Analysts expect growth will slow to 5.2 per cent this year, according to data from S&P Global Market Intelligence.
For Republic Services, analysts are forecasting revenue to rise by just 3.3 per cent this year, implying the company’s slowest annual growth since 2020. The share price is down 18 per cent from its peak last spring.
In other words, GFL’s dismal share-price performance over the past year has plenty of company. But some of its challenges are all its own.
Though the company is the fourth-largest waste hauler in North America, it lags its peers by a considerable margin. With a market capitalization of just over $19-billion, it’s about a third of the size of Waste Connections and less than a sixth the size of Waste Management (in Canadian-dollar terms).
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If there are efficiencies to be gained through size, GFL would appear to have less of them. Its profit margins are slightly lower than many of its peers.
That puts some emphasis on the company’s ability to strike acquisitions that can help it bulk up.
GFL has not been sitting idly. It has made several hundred deals in Canada and the United States since its founding in 2007. These acquisitions have helped drive revenues up 550 per cent since 2016, according to S&P Global Market Intelligence.
The company’s U.S. operations now generate about two-thirds of its revenue – adding a reason for GFL to move its official headquarters to Miami Beach, Fla., from Vaughan, Ont., earlier this year.
But growth comes with its own challenges.
In a complex deal last year, GFL sold a majority stake in its environmental services division, which includes soil remediation, for $6.2-billion to pay down debt that had been rising to concerning levels.
This week, investors voiced their disapproval of the company’s biggest move to date: a $5.4-billion deal to acquire Calgary-based Secure Waste Infrastructure Corp. and expand into Western Canada with assets tied to the energy sector.
GFL’s share price sank 10 per cent after the announcement on Monday.
One concern is that the acquisition will add industrial waste to the company’s traditional focus on municipal waste, raising some concerns about strategy drift. It exposes GFL to fluctuations within the energy sector, possibly making revenue streams more cyclical in the future.
For investors, beaten-up waste hauling companies can be a gift: If there is one thing North Americans are good at, it’s generating steadily rising amounts of trash. A business based on hauling, sorting and disposing of it should benefit from a utility-like income.
But even with the dip over the past year, the stocks aren’t cheap. And what could be the biggest challenge facing GFL, in particular, is that it has plenty of competition – perhaps not on your street, but in the stock market.